Rolex to Tiffany: How Leo Hamel rocks resale

San Diego jeweler specializes in vintage pieces, also has wholesale business

Leo Hamel got his start at the swap meet. Today he is the at the helm of a jewelry empire that includes a flagship store and seven buying offices; an eighth location will open next month in National City.
— Peggy Peattie

Leo Hamel got his start at the swap meet. Today he is the at the helm of a jewelry empire that includes a flagship store and seven buying offices; an eighth location will open next month in National City.
— Peggy Peattie

San Diego jeweler Leo Hamel made a name for himself selling good-as-new Rolex watches in the 1980s out of a 300-square-foot store on El Cajon Boulevard.

Customers didn’t seem to mind the trek, figuring if they could save 20 percent to 50 percent on a gold watch it was worth the drive to a shabby neighborhood.

These days, the San Diego businessman still resells watches, but now they’re under gleaming lights next to a case displaying the newest Hearts on Fire diamond collection in his showroom on San Diego Avenue, south of Old Town.

Leo Hamel

Career: First jobs included furniture mover, ballroom dancing teacher and jewelry counter attendant at the Walker Scott department store. He and Hart established the jewelry business in 1980. They sold loose gems and pearls at the local swap meet and street fairs, then opened a 300-square-foot store on El Cajon Boulevard. They eventually moved to two other locations on El Cajon Boulevard, each one larger. Their 10,000-square-foot showroom and offices south of Old Town opened in 2003.

Education: Attended San Diego City College and Gemological Institute of America

Recent book read: The Seven Habits of Highly Successful People

Hamel’s business has evolved well beyond its humble beginnings. Leo Hamel Fine Jewelers has more than 40 employees and has opened eight buying offices in the past four years. It has survived competition from independent and chain stores, lower profit margins and the recession.

While Hamel is an authorized dealer for several luxury brands, he’s selling more resale jewelry because that’s what customers want. He’s also taking advantage of strong gold prices with his thriving wholesale business. His most important asset, though, is relationships with customers that he maintains with letters, direct mail and phone calls.

His business strategy appears to be working. The privately held company’s revenues are double what they were in 2008, according to financial information he provided U-T San Diego. “The company has had its best year in a row five years now.”

We asked him about how his business works.

Buying used

Hamel’s store is among the top sellers in the world of William Henry knives made from rare materials like dinosaur bone that can retail for as much as $30,000. Pandora charms and earrings occupy a place of honor near the entry, and his store also carries the Hearts On Fire brand, known as “The World’s Most Perfectly Cut Diamond.”

But sales of new jewelry fell during the recession. Customers were willing to consider used jewelry, prompting Hamel to change his merchandise mix to offer more resale, including rare antique pieces.

“The strength has always been good value,” said Hamel. “We’ve gone back to our vintage roots because that’s the strong point; the value is there.”

He’s well positioned to do so, with an on-site gemological lab and watchmaker. The Rolex watch unofficially known as the “president” model, for example, sells for about $24,500 new. The resale price: $8,500 to $11,000.

He’s also selling used engagement rings, which is a surprise even to him. “We never thought we could sell used engagement rings; it was unheard of 10 years ago, but now it’s green.”

Precious-metals business

Hamel’s face is recognizable to many San Diegans because of TV ads in which he urges people to sell their collectibles to him so they’re not “melted down like scrap” by out-of-town gold dealers.

These days the wholesale side of his business makes up a substantial portion of revenues, although he’s hesitant to disclose just how much.

In the past four years, he has opened seven offices where he buys jewelry and metals, for both his resale and his wholesale business. His newest location is in El Cajon, not far from the very first Leo Hamel store on El Cajon Boulevard. A National City location will open in June.

In his wholesale business, he faces competition from national companies like GoldMax USA, which will have at least 10 county stores by the end of the year. “We just plan on delivering a better service and experience than those entities,” he said. “If San Diegans are going to sell precious metals and other items, as many of them as possible should stay here.”

Personal touch

Before starting his own business, Hamel says he got fired from a sales job, in part because he was writing notes to customers thanking them for their purchases.

“It was the late 1970s, and you didn’t write letters to customers,” he said. “You didn’t call customers at home. They (management) didn’t think that was appropriate.”

Times have changed, and now aggressive customer contact is part of the job. While the company has a presence on social media like Twitter and Facebook, its strength is personal service. Each member of Hamel’s sales team reaches 160 customers a week with phone calls and letters. Some will let regular customers know when a certain kind of resale piece comes in. The store’s computers log customers’ birthdays and anniversaries, and remind them each year if they wish.

“Other jewelry stores, a weakness is that they don’t follow up with their customers,” he said.

Hamel tracks each member of his sales team with graphs, and uses the information to help them improve. For example, he might notice that a saleswoman isn’t making as many transactions. He might determine that she needs training in closing deals, for example, or that she is having personal problems, making it difficult to connect with customers.

“I’m so good at reading graphs,” he said, “that I can tell the week a salesperson began having trouble with their boyfriend.”

5 ways jewelry stores fail

Some lessons from Leo Hamel Fine Jewelers:

Their merchandise mix is stale. Leo Hamel said he constantly restocks both his resale and new inventory to ensure he has what people wants. “As soon as something’s 1 year old, it’s (usually) on sale,” he said.

They don’t stay in touch with customers. Members of his sales team call people to share a description of a new piece, write letters to thank them for a purchase and remind them about anniversaries and birthdays.

Their prices are too high. Some jewelry stores rely on expensive in-house credit programs to convince people to buy things at high prices, Hamel said. “We’ll sell a ring for $200 and they will sell the same one for $600, but you’ll pay it off over the next six years,” he said.

They’re not willing to adapt. At one point, Hamel sold mostly new jewelry but during the recession, he shifted to carry more resale items when he found that customers were looking for value. He also capitalized on high gold prices to expand his wholesale division.

They don’t track numbers. Every customer who walks into Hamel’s showroom is asked what brought them there. The answer is recorded in the computer and Hamel uses the information in his decisions about where to advertise. It’s one of many metrics he tracks every week.